Gold Gains for Fourth Day, Silver Tops $18

Gold rose for a fourth straight session in New York on Wednesday as a weakened US dollar came into the picture, pulling investors toward commodities. Silver was biggest metal gainer, rising 2.1 percent and topping $18 an ounce for the first time this year. Platinum climbed 1.3 percent.

In other markets, crude oil finished up for the tenth straight time to record a 15-month high while US stocks again closed mixed with very narrow movement.

New York precious metal figures follow:

Gold for February delivery jumped $17.80, or 1.6 percent, to $1,136.50 an ounce. It ranged from $1,116.80 to $1,138.40.

Silver for March delivery surged 37.5 cents to close at $18.175 an ounce. It ranged from $17.755 to $18.235.

April platinum rose $20.60 to end at $1,558.40 an ounce. It ranged from $1,525.00 to $1,569.30.

In PM London bullion, the benchmark gold price was fixed to $1,130.00 an ounce, which was an increase of $6.75 from Tuesday. Silver rose 32 cents to $17.890 an ounce. Platinum was settled at $1,556.00 an ounce, gaining $38.00.

Notable bullion quotes follow:

"We’ve seen the data push the dollar down and gold jump," Tom Schweer, a senior market strategist at LaSalle Futures Group Inc. in Chicago, said on Bloomberg. "With the Fed forced to keep rates low, the dollar will start to decline and that should allow gold to rally."

"The global economy is improving at a faster pace than expected, and the net result is increased demand for products, which is causing a [price] rise in commodities," Brian Kelly, chief executive of Kanundrum Research, a commodities and macroeconomic research firm, said on MarketWatch. "Investors are interpreting these price increases as inflationary and are buying gold as a hedge."

"There is a large portion of the trade that is still banking on ultra-low interest rates and the availability of near zero-cost dollars with which to fuel forays into gold, oil, copper, as well as other currencies and emerging market equities," wrote Jon Nadler, senior analyst at Kitco Metals, Inc.

The key question remains the longevity of this type of bet, (as well as that of the current interest rate environment) given recent Fedspeak. Indeed, some of the participants are treating that with typical skepticism and are labeling it as nothing more than ’empty words.’" [Read Nadler’s full commentary.]

Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

Oil and gasoline prices

Oil prices rose on Wednesday "as a weaker dollar and cold weather boosted prices, offsetting a bearish petroleum report from the government," wrote Moming Zhou of MarketWatch. New York crude-oil for February delivery soared $1.41, or 1.7 percent, to $83.18 a barrel.

"The weather is cold everywhere in the Northern Hemisphere with Europe getting walloped and China as well," Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo, said on Bloomberg. "Anything that’s positive for heating oil and middle distillate demand has to be a positive for crude oil."

The national average for regular unleaded gasoline jumped 1.8 cents to $2.685 a gallon, according to AAA fuel data. That is 6.2 cents higher than last week, 5.3 cents more than a month back, and 99.7 cents above the price of a year ago.

U.S. Stocks

U.S. stocks closed mixed "as investors mulled weakness in tech and telecom along with signs of stabilization in the job market and services sector of the economy," wrote Alexandra Twin of CNNMoney.

"I still think you’ll do better in equities than in bonds this year, but the bottom line is that it’s going to be a rocky ride," economist Diane Swonk, of Mesirow Financial in Chicago, said on MarketWatch. "The reality of going 30 miles per hour instead of 70 toward where you need to be in the economy is going to set in at some point."

Gold, Silver, and Metals: Prices and Commentary – Jan. 6

Gold buyers were out in decent numbers in Asia overnight, and the yellow metal eventually built upon its small opening gains, to reach $1127 an ounce. Bullion continued to see support just under $1120 per ounce and dip-buying remained the theme as the week tipped into its second half. The 7% drop in values seen in December — the steepest such decline in a year-has prompted at least part of the speculative player crowd to organize a recovery attempt as the new year got underway.

That said, there is a large portion of the trade that is still banking on ultra-low interest rates and the availability of near zero-cost dollars with which to fuel forays into gold, oil, copper, as well as other currencies and emerging market equities. The key question remains the longevity of this type of bet, (as well as that of the current interest rate environment) given recent Fedspeak. Indeed, some of the participants are treating that with typical skepticism and are labeling it as nothing more than ’empty words.’ We may get a better glimpse at just such words, when the FOMC meeting minutes come to see the light of day, later on today.

Following the overnight gains in Asia, New York gold trading opened with a $7.80 rise this morning, quoted at $1125.00 per ounce, as against a mildly rising dollar (last seen at 77.73 on the index, and at 1.435 against the euro) — indicating that predominant buying was still in force among players (as seen on the Kitco Gold Index, at http://www.kitco.com/kitco-gold-index.html#RT ) in this niche.

News from Europe (as we expected yesterday) is that the ECB will not come to the aid of debt-ridden Greece. This posturing, however, is most likely due to the fact that Greece is quite far from an actual default and that the ECB members feel there is a chance for the country not only to reduce deficits, but to be able to obtain funding from other sources.

No such relatively ‘rosy’ picture in Iceland for the moment, however. The country’s debt was downgraded to just one notch above the ‘junk’ level following President Olafur Ragnar Grimsson’s veto of legislation that would have repaid the Netherlands and the UK for bailing out depositors of a failed Icelandic bank. The country’s finance minister sought to reassure the world that Iceland will not default, despite the downgrade. Evidently, the locals made their feelings about the legislation quite "clear" outside the very home of the country’s President, as seen in this photo. Evidently, they are not caroling in the snow. We’re talking serious "veto power" here, folks. You can feel the ice melting from the radiating rage.

Photo courtesy of Reuters

Australia’s The Age reports that: "[Icelandic] Voters are understandably furious about a situation they believe was created by a handful of unscrupulous, badly managed banks and now saddles the whole nation with decades of debt. This is despite the fact Icelanders spent years enjoying the fruits of fast growth and a booming economy." Gee, where have we heard that one before? And what was done about it?

Silver rose 18 cents at the open, reaching $17.94 per ounce, while platinum showed further firmness, gaining $14 to $1541 the ounce. Something else we may also get a better view of today, is the jobs situation in the US. The ADP report on December payrolls will hit the wires this morning, two days prior to the government’s on statistical set of numbers. The data coming today and Friday will likely make for some lively trading plays.

Palladium added $1 to climb to $420 and rhodium was quoted at $2500 per troy ounce. Palladium has now gained about 18% since just before Christmas, while platinum is nearly 11% higher. However, the standout remains rhodium, which is trading some 20% higher than it was, just two weeks ago. Now that, is white metal power, in action.

As we indicated in previous comments, the noble metals niche can, and will, benefit handsomely from the recovering automotive sector. U.S. car sales advanced 15% in December, marking the first quarterly improvement since the last three months of 2006. The trio of noble metals hit the road in the wake of the news, and is apparently seeing mostly open road, ahead.

Platinum is of course also being helped by the advent of ETF vehicles that will enable players to invest without some of the conventional drawbacks they may encounter in the process. Mineweb informs that:

"ETF Securities said that a financial firm has bought 100,000 shares of its proposed first-ever U.S. platinum exchange-traded fund (ETF) and delivery is scheduled by the end of the week. The initial purchaser was Susquehanna Capital Group, which is also the lead market maker, ETF Securities USA said in a filing with the U.S. Securities and Exchange Commission on Dec. 31.

The purchase took place Dec. 30 with delivery expected about Jan. 8, according to the filing. Susquehanna also bought 100,000 shares in ETF’s U.S. palladium ETF, the filing said. ETF Securities USA is wholly owned by London-based ETF Securities Ltd.

On Dec. 22, the SEC approved a proposed rule change to list and trade shares of the Platinum and Palladium Trusts proposed by London-based ETF Securities. Analysts anticipated a rush of investment dollars into the platinum and palladium markets if the SEC gives its final nod. Spokeswomen with ETF Securities and the SEC did not provide additional details."

Watch for ADP data, watch for Fed minutes being dissected. For the moment, the dollar is up 0.10 and gold remains higher as well. Subject to change, of course. That, is the very name of that game.